Peru may drop $4.8 billion Cajamarca Gold mine project

A final decision regarding Newmont's Peru gold mine project will be taken next week as Peruvian government is finalizing a deal with US mining giant.

LIMA(BullionStreet): A final decision regarding Newmont's Peru gold mine project will be taken next week as Peruvian government is finalizing a deal with US mining giant.

The proposed $4.8 billion gold mine in the Cajamarca area of northern Peruwas suspended December 4, initially for two months, after an 11-day worker strike over adverse environmental impacts that many in the region fear will result.

The open-pit project, located some 3,700 meters (12,140 feet) above sea level, involves moving the water from four lakes high in the Andes mountains into reservoirs the company would build.

It has drawn protests from local residents, including mine workers, farmers and environmental activists, who fear that contaminated water from the project could despoil the area's lakes and rivers.

Meanwhile, Newmont's Richard O'Brien said in an earnings call with analysts that if the $4.8 billion project cannot be developed "in a safe, socially and environmentally responsible manner" while also earning shareholders "an acceptable return" Newmont will "reallocate that capital to other development projects in our portfolio, including opportunities in Nevada, Australia, Ghana, and Indonesia."

Newmont is the majority stakeholder in Conga as well as in nearby Yanacocha, Latin America's biggest gold mine.

Yanacocha, which is nearing the end of production, has a history of troubled relations with neighboring farmers who claim it has harmed their water supplies.

Peru's economy depends heavily on mining, which accounts for more than 60 percent of its export income.